Looking beyond Brexit, the UK elections and recent international events, it is sobering to think about what the fires happening in Australia and the cost that its environment, wildlife and people are paying. The fortitude of the Australian people is remarkable when you consider that many have seen their houses and communities disappear.

The impact of housing on the environment

As a lender to the residential construction market, this has made us think about the impact housebuilding has on the environment. The Committee on Climate Change estimated that 18% of the UK carbon emissions came from buildings (mostly homes), with a further 15% from electricity consumed by buildings. The UK has a key target of reducing carbon emissions by 80% by 2050 so the Building industry has a role to play in helping meet this target.

Why aren’t more energy-efficient homes being built?

We are seeing some trends emerge: pre-fabrication, modular construction, new materials and some energy-efficient technology, and we are indeed currently funding a modular construction site up in Scotland, but these still are piecemeal. Why?

Cost remains an issue with some of the new technologies and technology itself is evolving rapidly making it difficult to see where standardisation can be achieved to achieve economies of scale. Local councils are very focused on reducing car usage in metropolitan environments but why would they not insist on electric car charging points as part of their planning approvals for example? They also seem to have quietly abandoned sustainability code levels in recent years.

Modular and off-site building methods are problematic for funders simply because the standard control mechanisms used by surveyors and lenders don’t apply in the same way. We mentioned that we are funding a scheme in Scotland – we have been able to get comfortable with a scheme built entirely off-site because the developer controls the process from end-to-end, i.e. they are manufacturing and storing the product in-house.

Our experience with new technologies (as a lender) has been poor to-date, not because the technology doesn’t work, but more because the specialised skills required to implement these techniques are lagging in the UK. The industry seems generally very reluctant to push progress and training in new directions but runs the risk of being leap-frogged by the more visionary ones, as buyers of new homes in both the private and public sectors start demanding higher levels of sustainability.

The cost of using energy-saving technology is coming down rapidly and it would be good to see more use being made of renewable energy systems. Estimates that the cost of achieving carbon-neutral new housing would add 1.5% to 2.5% to the end price tag but this is likely to come down and ought to be cheaper than having to retro-fit technology to houses being built now.

It’s up to all of us accelerate change

So, we could all do our bit to accelerate change as a funder – to be more open-minded about schemes involving new methods, as a consumer – about asking for better, and as a player in the industry – by challenging our borrowers and advisors to aim higher!

By Cécile Verroest, BLG’s Credit/Risk Director and advocate of sustainable living.

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